Translating theory into practice
The need to act in the fight against climate change is increasing and investors are facing growing pressure from internal and external stakeholders.
Climate change presents both risks and opportunities, not only for investors but also for their portfolio companies. That is why Invest Europe, with its Climate Change Guide, aims to help members in their climate risk assessment and management activities. The Guide provides the right toolkit to enable investors to reap the benefits of integrating climate change considerations into their investment decisions.
The Invest Europe Climate Change Guide constitutes one of the most complete guides on Environmental, Social and Governance (ESG) issues, and in particular climate change, for private equity investors to date. Its structure follows a step-by-step approach and is based on three different modules – Introductory, Intermediate and Advanced - covering all stages of investors’ ESG journey and being suited for both those getting started and those looking at taking climate change considerations to the next level.
The Guide is a unique and comprehensive combination of tailored guidance, practical tools and concrete business cases made by practitioners for practitioners to help them navigate the increasingly complex ESG landscape.
Part 1: Introduction to climate change
The first part of Invest Europe's Climate Change Guide provides entry-level support to practitioners seeking to integrate climate change considerations in their investment processes, from pre-investment due diligence over the holding period to the exit phase. The Guide sets out a high-level introduction and framework to scope, identify, assess, manage and monitor climate-related risks and opportunities in private equity portfolio companies. The guidelines and practical tools in the Guide are complemented with concrete business cases from both a GP and an LP perspective.
Part 2: Engaging portfolio companies
Climate change presents an opportunity for the industry, providing a further avenue for increasing portfolio company value, improving talent retention, and lowering the cost of capital. It also presents risks, which could disrupt portfolio companies’ performance and/or business models, if not mitigated. The second part of the Invest Europe Climate Change Guide aims to help GPs engage in dialogue on climate change issues with their portfolio companies, providing the tools to enable positive conversations and facilitate concrete actions to obtain results that will create sustainable value.
Part 3: Setting targets as part of a business plan
The third part of the Invest Europe Climate Change Guide is aimed at GPs and their portfolio companies who are ready to move onto the next phase of their climate journey. It focusses on integrating target setting into a business plan as a pathway to decarbonisation and dives into the details of how to collect and measure scope 3 emissions data, as well as scope 3 reduction levers. In addition, it showcases different tools on how to evaluate climate impact (e.g. scenario analysis and internal carbon pricing) as a way of achieving set targets in line with global climate goals and looks at the transition to a net-zero future from various perspectives, including SBTi and the UN SDGs.
Invest Europe developed a series of on-demand interactive e-learning courses on Climate Change based on the content of the Climate Change Guide. The 3 courses linked below offer a complete and flexible learning path and are now available for registration on Invest Europe Learning Hub.
